You may well have heard of the Time To Pay initiative. As a business owner, if you’re in financial bother and you can’t pay your VAT, PAYE or your corporation tax on time, it could be an answer to your troubles. But while Time To Pay might well be a viable solution, see if it’s right for you.

What is Time To Pay?

Just as it sounds, it’s an installment plan that gives you more time to settle your tax debts and bring your arrears up to date. HMRC will not reduce the tax you owe, but with Time To Pay, you’ll be able to spread your repayment of tax arrears and get some breathing space. HMRC will continue to charge you interest, but as long as the Time to Pay is kept to, they will stop penalties.

Why consider a Time to Pay Arrangement?

Maybe you’ve got cashflow problems? Perhaps you’ve had a sticky few months? Either way, being late with your tax payments is a bad idea. Late tax payments send a red flag to HMRC – their system spots late payers early (in some cases anticipates them!) and lets them know that your company is potentially insolvent. If that happens, that’s just the start of your problems. Expect hefty penalties or even seized assets. Bankruptcy or winding up proceedings may follow.

What does HMRC consider a ‘good’ Time to Pay Arrangment?

HMRC want continuing communication and honesty. They want to understand the reasons for the arrears and how the business is able to move forward profitably, not only repaying its arrears, but also how it will service its ongoing tax liabilities.

Bear in mind, that although they might not know you personally they will know your previous tax filing and payment history, and it’s this that they will also take into account when assessing your request.

Clearly, they’ll also look at the chances of the Time To Pay plan being successful based on the details you give them. We always suggest getting a third party such as your accountant, or a firm like us to present your case well. It shows you are taking the issue seriously, and should iron out any gremlins in the figures being presented. If you’re successful, the Arrangement will be quickly agreed, and you’ll be told your rights and what the penalties might be if you don’t keep to the agreed arrangement, or if you’ve supplied any false information.

How much time will I get?

HMRC will give anything between 1 and 24 months, but clearly every situation is different. As such, all arrangements are discretionary and wholly dependent on your circumstances.

An important note.

HMRC’s Time To Pay scheme is designed for businesses with real financial problems, but also businesses must be able to keep up with the agreed arrangement.

If you are unable to keep up with agreed repayments or fall foul of future tax receipts, HMRC are likely to react much quicker and be less forgiving – it’s deemed a one-off chance, most certainly not to be repeated!

If you have other debts, its likely that a different approach beyond just a Time to Pay might be appropriate – it may be worthwhile considering CVA, Liquidations, or Administration?

Feel free to email me at ewall@robsonscott.co.uk or phone 01325 365 950. Happy to discuss TTP or any of the other solutions available.

Best of luck

Eamonn Wall
Managing Director